ECONOMYNEXT –The recent sharp decline of the Sri Lanka Rupee (LKR) over the past month has reignited anxieties reminiscent of the 2022 financial collapse.

The rupee has fallen more than 5 percent so far this year to a level seen in 2022 after being stable for over three years.

While Central Bank Governor Nandalal Weerasinghe has attributed this volatility to global trends, likely strengthening of the US Dollar and shifting international commodity prices, the domestic implications are profound.

For a nation still in the fragile stages of an IMF-backed recovery, currency depreciation is not merely a technical adjustment; it is a direct threat to the standard of living for every citizen not earning in foreign exchange.

The ripple effects of the depreciation could be detrimental for Sri Lanka’s recovering economy under an IMF deal. Here are a few effects that could adversely impact the island nation:

Sri Lanka remains heavily dependent on imports for essential goods, including fuel, medicine, and food. When the rupee loses value, the cost of bringing these goods into the country rises instantly.

Cost-push inflation is the most direct consequence. As the landing cost of fuel increases, transport and

production costs across all sectors rise, leading to a second wave of price hikes.

In 2022, hyperinflation peaked near 70% following the sudden float of the rupee. While the current depreciation is less drastic, it threatens to reverse the disinflationary trend achieved in early 2025.

Already the inflation has spiked to 5.4 percent in April from 2.2 percent in the previous month, mainly due to sharp fuel price increases and its spillover effects. The recent rupee depreciation has yet to be absorbed into prices.

For the average household, depreciation translates to a hidden tax.

As prices for electricity, gas, and groceries climb, the portion of income available for education, healthcare, and savings shrinks.

The 2022 crisis proved that the middle class is the most vulnerable to sudden depreciation, as their fixed salaries fail to keep pace with the rapidly rising cost of a basic consumption basket.

In 2022, the sudden and uncontrolled floating of the Sri Lanka Rupee acted as a primary catalyst for the nation’s deepest economic collapse, causing the currency to lose over 60% of its value within months.

This sharp depreciation triggered a cost-push inflationary spiral that saw headline inflation peak at an unprecedented 70%, while food inflation soared near 95%.

For the average Sri Lankan, this meant the price of essential imports such as fuel, cooking gas, and medicine, doubled or tripled almost overnight, effectively wiping out the purchasing power of fixed-income earners and pushing millions into food insecurity.

Today, while the current depreciation is more gradual and attributed by the central bank to global trends, rather than domestic depletion, the impact remains a significant threat to household stability.

Unlike the 2022 shock, which was characterized by absolute shortages and queues, this gradual slide serves as a silent tax, steadily eroding the marginal gains made during the recent disinflationary period.

As transport costs and electricity tariffs rise in tandem with the weakening rupee, hardworking families again face the prospect of a nutritional trade-off, where the increasing cost of imported inputs for production and logistics forces a reduction in the quality and quantity of daily consumption.

By Shihar Aneez

Colombo Additional Magistrate Lahiru Silva has directed Keselwatta Police to obtain and examine the telephone data records of a Grama Niladhari who issued certification documents for bail guarantors in a suspected bail-for-money racket linked to proceedings involving former SriLankan Airlines CEO Kapila Chandrasena.

The order was issued after police requested further investigations when four suspects, including Perumal Ganesh, a domestic worker attached to the residence of former cricketer Aravinda de Silva, were produced before court over allegations of presenting fake bail guarantors.

Police told court that investigators have uncovered strong suspicions surrounding the issuance of 17 Grama Niladhari certificates within a five-month period to two individuals—Mohamed Rizwan and Mohamed Ishan—who allegedly acted as guarantors in multiple bail applications. According to police, Rizwan obtained 10 certificates while Ishan obtained seven, all of which were used in court-related proceedings, raising concerns of an organised racket.

The Magistrate ordered that telephone data records of the relevant Grama Niladhari from January to date be analysed as part of the probe.

Police further alleged that Rizwan, Ishan, and Ariya Tissa de Silva, residents of the Sanchi Arachchiwatte area near the Aluthkade Courts complex, provided cash and acted as personal guarantors in the bail application of Chandrasena, who had been remanded in connection with allegations of receiving a USD 2 million bribe in the Airbus deal.

On the 5th, court granted bail to Chandrasena under conditions including two personal sureties of Rs. 10 million each and cash bail of Rs. 500,000. Police allege that the guarantors presented were not known relatives or associates of the accused.

Investigators further informed court that Perumal Ganesh had signed the cash bail guarantee and was identified during an identification parade held on Thursday. The Crime Branch of Keselwatta Police, led by Sub-Inspector K.W.D. Anuruddha, told court that prison officials had identified him.

Police also raised objections to granting bail, noting that investigations into Chandrasena’s death remain ongoing and a final determination has not yet been reached.

However, defence counsel appearing for the suspects rejected the allegations, arguing that their clients were only present to facilitate bail and that no direct charges had been established against them.

After considering submissions, Magistrate Lahiru Silva ordered that the four suspects be further remanded until the 20th and directed police to submit a detailed summary of evidence in the case.

Parliament is scheduled to meet from May 19 to 22, Acting Secretary-General of Parliament Hansa Abeyrathne said.The parliamentary agenda for the four sitting days was decided at the Committee on Parliamentary Business meeting held under the chairmanship of Deputy Speaker Rizvie Salih.

Accordingly, on each sitting day, the time from 9.30 am to 10 am has been allocated for Business of Parliament under Standing Order 22(1) to (6), while Questions for Oral Answers will be taken up from 10 am to 11 am. Questions under Standing Order 27(2) are scheduled from 11 am to 11.30 am.

On May 19, Parliament will take up the Second Reading debate on the Inland Revenue (Amendment) Bill from 11.30 am to 5 pm. Time from 5 pm to 5.30 pm has been reserved for the Opposition Motion at the Adjournment Time.

On May 20, an adjournment debate on the Central Bank’s Annual Economic Review for 2025 will be held from 11.30 am to 5.30 pm on a motion moved by the Government.Parliament is also scheduled on May 21 to debate three regulations under the Imports and Exports (Control) Act and nine resolutions under the Appropriation Act.

On May 22, Parliament will present votes of condolence in memory of former MPs Prof Tissa Vitarana, S.C. Muthukumarana, Chandradasa Galappatthy, Nandana Gunathilake, Janak Mahendra Adikari and Kanagasabai Thanmanpillai. Questions at the Adjournment Time will follow from 5 pm to 5.30 pm.